Category Archives: Business

Green Fast Food Chain Beats Competition in Sweden and Elsewhere

I was recently a panelist at a seminar on the island of Gotland, Sweden along with Par Larshans who happens to be the chief sustainability officer for Max Burgers, Sweden’s No. 1 burger chain. Par sent me a link to an article that appeared about a year ago in Time magazine. The article,Why Going Green Can Mean Big Money for Fast-Food Chains, describes the phenomenal business success that Max achieved as it took measures to reduce it’s carbon footprint and provide healthier choices for its customers. Read it here. — t.h.g.

Reorganizing business: from serving stockholders to serving people

Part of the socio-economic transformation that needs to occur lies in shifting business motivation from profits for a few, to benefiting the common good. Cooperatives are not the full answer, but may have a useful role to play. A recent article, Six Ways to Fuel the Cooperative Takeover, provides some useful ideas in that direction.

Here is a summary of the Six Ways:

1. Find Money

2. Convert to a Co-op

3. Hook Up With Big Partners

4. Be Co-op Curious

5. Shop Co-op

6. Make Co-op Friendly Laws

The details can be read here.

Organizational design for life: Can Corporations be Reformed?

Important insights from Marjorie Kelly

I first met Marjorie Kelly more than 15 years ago when we were both privileged to be participants in a series of colloquia organized by the late Willis Harman (then Executive Director of the Institute of Noetic Sciences) and Avon Mattison of Pathways to Peace. I was, from that first meeting, quite impressed with Marjorie’s intelligence and passion for positive change. She founded, and for 20 years published, Business Ethics magazine. She is the author of The Divine Right of Capital and recently, Owning Our Future: The Emerging Ownership Revolution.

Her recent article, Living Enterprise as the Foundation of a Generative Economy, raises fundamental questions about the economy, corporations, and generative ownership designs. It is one of the most insightful and important articles I’ve ever read on the topic of organizing for sustainability. Here are a few excerpts. –t.h.g.

“What kind of economy is consistent with living inside a living being?” .

You don’t start with the corporation and ask how to redesign it. You start with life, with human life and the life of the planet, and ask, how do we generate the conditions for life’s flourishing?

If you stand inside a large corporation and ask how to make our economy more sustainable, the answers are about incremental change from the existing model. The only way to start that conversation is to fit your concerns inside the frame of profit maximization. (“Here’s how you can make more money through sustainability practices.”) Asking corporations to change their fundamental frame is like asking a bear to change its DNA and become a swan. ……

Can we sustain a low-growth or no-growth economy indefinitely without changing dominant ownership designs?

That seems unlikely. Probably impossible. How, then, do we make the turn? How can we design economic architectures that are self-organized not around profit maximization, but around serving the needs of life? ……

In ownership design, there are five essential patterns that work together to create either extractive or generative design: purpose, membership, governance, capital, and networks. Extractive ownership has a Financial Purpose: maximizing profits. Generative ownership has a Living Purpose: creating the conditions for life. While corporations today have Absentee Membership, with owners disconnected from the life of enterprise, generative ownership has Rooted Membership, with ownership held in human hands. While extractive ownership involves Governance by Markets, with control by capital markets on autopilot, generative designs have Mission-Controlled Governance, with control by those focused on social mission. While extractive investments involve Casino Finance, alternative approaches involve Stakeholder Finance, where capital becomes a friend rather than a master. Instead of Commodity Networks, where goods are traded based solely on price, generative economic relations are supported by Ethical Networks, which offer collective support for social and ecological norms.

Ownership is the gravitational field that holds an economy in its orbit. Today, dominant ownership designs lock us into behaviors that lead to financial excess and ecological overshoot. But emerging, alternative ownership patterns – when properly designed – can have a tendency to lead to beneficial outcomes. It may be that these designs are the elements needed to form the foundation for a generative economy, a living economy – an economy that might at last be consistent with living inside a living being.

Read the complete article here.

If we must have the corporation, let it be “B”

Few people are yet aware of it, but there is a new form of organization that seeks to transform the behavior of the corporation to make business a force for change that servers the common good. The B Corporation is “a new type of corporation that meets rigorous and independent standards of social and environmental performance, accountability, and transparency.” 

Here’s a letter from the B Lab team that recounts the recent history and announces the upcoming retreat.—t.h.g.

It was twenty years ago today . . .

Actually, it was five years ago this week that the curtain rose on the B Corp movement.
At the invitation of then BALLE executive director and current RSF Social Finance CEO Don Shaffer, we were given an opportunity to share the vision of B Corp in a plenary setting before we had any business being given the stage.  As if sensing the moment, 13 leaders of the sustainable business community with whom we had been gestating the concept for more than a year, said that if the curtain was rising on B Corp, then they wanted to be on stage for the first performance.

Our memory is (other than Jay being uncharacteristically brief in his introductory remarks) mostly of being humbled that these leaders, already recognized as such by their peers, were willing to stand up and lend their credibility to something so unlikely and audacious.  But, then, that is what leaders do.

We remember (perhaps correctly) Jeff Mendelsohn characteristically bounding to take the mic first to explain why New Leaf Paper was becoming a Founding B Corporation.  Or maybe it was Mike Hannigan (Give Something Back) who led off as our unofficial local host?  Or maybe everyone appropriately deferred to Judy Wicks (White Dog Café) as BALLE’s co-founder?  They were joined by Matthew Bauer (Better World Telecom), Ben Bingham (now 3 Sisters Sustainable Investments), Jason Salfi (Comet Skateboards), Scott Leonard and Matt Reynolds (Indigenous Designs), Elizabeth Guman (now Strategy Arts), Mal Warwick (Mal Warwick Associates), and competitors cum collaborators Adam Lowry (Method), Gregor Barnum and Jeffrey Hollender (Seventh Generation).  We are sure (and sorry) that we are forgetting some who were leading that day.

It is wonderful to be here.  It’s certainly a thrill.

It’s hard to believe this all began from a standing start five years ago.  Although, it wasn’t a standing start was it.  The sustainable business movement, the local living economies movement, socially responsible business and investing movements, microfinance, clean tech, organics, green building et al were all long-standing and vibrant.  Myriad thought and action leaders too numerous to mention have inspired and influenced each of those on stage and the now more than 500 Certified B Corps in countless ways.  The community of B Corps will hopefully inspire and influence the next generation of leaders whose names we don’t yet know and whose ideas we can’t yet imagine.

With the 5th anniversary of the B Corp on our minds and our October Champions Retreat approaching, we are feeling the need to reflect and to hear your reflections on where we’ve been and where we may be headed.  Whether you’d like to share a memory, a vision, or a concern, a hope, an idea, or a suggestion, please share it with us or post it on our internal B Corp community listserve – which you can access here.

In five short years, together we have built a vibrant and diverse community of more than 500 leading businesses across 60 industries, 40 states, and now 8 countries.  More than 2,000 other sustainable businesses are using the standards we’ve developed together to measure what matters most and to help them benchmark their performance and increase their impact.  Together, we have passed legislation — that a former president of the American Bar Association calls ‘the first, real, original, constructive thought in the corporate governance world in 25 years’ – in 7, no, now 8 states, as today benefit corporation legislation was enacted in Louisiana by Republican Governor Bobby Jindahl.  Much more has been accomplished (the launch of GIIRS and a national ad campaign to name a few) and, of course, since much more remains yet to be done.

I don’t really want to stop the show.

So stay tuned, enjoy the summer, share your reflections and visions and make sure you put October 3rd-5th on your calendar to join your fellow leaders in Half Moon Bay for our Champions Retreat as we focus our collective energy on the power of collective action and create plans for what we can do together that we can’t do alone.

Thanks to all who have led the way and given this community an opportunity to serve.  Thank you to the 13 who taught the band to play.  And thank you all for making playing so well together.

Be the change,

Jay, Bart, Andrew and the B Lab team
jay@bcorporation.net

Small entrepreneurs differ from Big Business

We should not confuse capitalism and corporatism with “free markets,” which I hope will always be with us, nor should we believe that mega-corporations are the same as “Mom and Pop” enterprises. The corporate “wolves” that are intent on centralizing power like to masquerade as entrepreneurial “sheep” so that they can dominate markets and eliminate competition. We must not be deceived by that, nor should we perpetuate that illusion. A recent poll shows that small business owners do not have the same attitudes toward regulation and taxation as big business executives. Here is a report from the Greenville News.–t.h.g.

Poll: Small business owners’ opinions differ from big business concerns

By Jenny Munro
Greenville News (SC), February 9, 2012

Columbia, SC—A national poll shows the opinions of small business owners differ dramatically from the advocacy of big businesses and multinational corporations.  The results of the national scientific poll were released over the past four weeks by the American Sustainable Business Council, Main Street Alliance and Small Business Majority.  The poll was conducted by Lake Research Partners between December 8, 2011 and January 4, 2012.

”Many of the real opinions of small business owners are far different than what are portrayed by big business interests,” said Frank Knapp, Jr., Vice Chair of the American Sustainable Business Council and President/CEO of the South Carolina Small Business Chamber of Commerce.

“There are some real ‘man-bites-dog’ stories here that are particularly amazing since half of the respondents self-identified as either Republican or leaning Republican,” said Knapp.

“Small business owners do not hate regulations,” said Knapp.  “They support regulations ensuring clean air and water and those moving the country toward energy efficiency and clean energy.  And regulations are not stopping hiring as we’ve been hearing—lack of consumer demand is doing that.  In fact, small business owners view regulations as protecting them from big business.”

“Small business owners also don’t agree with the big business mantra on taxation,” said Knapp.  “They say that big businesses and multinational corporations use loopholes to avoid paying their fair share of taxes which harms small businesses.  A majority of these owners also support higher tax rates on individual income over $1 million, even $250,000.”

“These opinions fly in the face of the rhetoric about not raising taxes on the wealthiest because they are the ‘job creators’”, said Knapp.  “Small businesses are leading the job recovery in this country and they believe the wealthiest corporations and individuals are not paying their fair share of taxes.”

“On other issues small business owners share the public’s disgust with money in politics and disapprove of the Supreme Court’s Citizens United decision,” said Knapp. “Citizens United has unleashed massive amount of money from big corporations and millionaires and billionaires into political campaigns.  Small businesses believed they have been harmed because of this.”

Below are details of the poll results:

  • Small business owners see their top problem as weak customer demand, not regulations: 34 percent cited weak customer demand as the most important problem for their business, while only 14 percent named government regulations.
  • On the question of what would do the most to create jobs, cutting regulations came in low on the list: the top response was eliminating incentives to move jobs overseas at 24 percent; reducing regulation was fifth at 10 percent.
  • Small business owners see an important role for standards and safeguards: 78 percent believe some standards are important to protect small businesses from unfair competition, and 76 percent believe regulations on the books should be enforced.
  • Small business owners see regulations as necessary for a modern economy: 93 percent agree their business can live with some regulation if it is fair, manageable and reasonable.
  • Small business owners express strong support for specific rules and standards: 78 percent support rules to prevent health insurance companies from increasing rates excessively, 84 percent support food safety standards, 80 percent support product safety standards and 80 percent support disclosure and regulation of toxic materials.
  • Small business owners support clean energy policies: 79 percent support ensuring clean air and water, and 61 percent support moving the country towards energy efficiency and clean energy.
  • Small businesses believe in streamlining government processes: 73 percent of respondents believe we should allow for one-stop electronic filing of government paperwork.
  • Nine out of ten small business owners say big corporations use loopholes to avoid taxes that small businesses have to pay: 92 percent say big corporations’ use of such loopholes is a problem. Three-quarters of owners say their small business is harmed when loopholes allow big corporations to avoid taxes.
  • Nine out of ten small business owners say that U.S. multinational corporations’ use of accounting loopholes to shift their U.S. profits to their offshore subsidiaries to avoid taxes is a problem: 91 percent agree it is a problem, with 55 percent saying it’s a very serious problem. When asked what would do the most to create jobs, small business owners chose eliminating incentives to move jobs overseas.
  • Small business owners say big corporations are not paying their fair share of taxes: 67 percent believe big corporations pay less than their fair share. An even bigger majority, 73 percent, says multinational corporations pay less than their fair share.
  • Small business owners say millionaires pay less than their fair share in taxes: 58 percent say households whose annual income exceeds $1 million pay less than their fair share.
  • Small business owners support a higher tax rate for individuals earning more than $1 million: 57 percent agree that individuals earning more than $1 million a year should pay a higher tax rate on the income over $1 million.
  • Small business owners want to eliminate the “carried interest” loophole that gives hedge fund managers a big break on their taxes: 81 percent favor hedge fund managers paying taxes at the ordinary income tax rate, which currently tops out at 35 percent, rather than the 15 percent capital gains rate they pay now.
  • Small business owners support ending upper-income tax cuts: 51 percent say Congress should let tax cuts on taxable household income over $250,000 a year expire (only 40 percent believe they should be extended).
  • Respondents in this scientific national survey were politically diverse, with a majority Republican or independent-leaning Republican: 50 percent identified as Republican (27 percent) or independent-leaning Republican (23 percent); 32 percent as Democrat (14 percent) or independent-leaning Democratic (18 percent); and 15 percent as independent.
  • Small business owners say Citizens United decision hurts small businesses:  66 percent of small business owners view Citizens United v. FEC decision as bad for small businesses; 88 percent hold negative view of money in politics overall.

Read the full poll reports at these links:

http://www.asbcouncil.org/poll_regulations.html

http://www.asbcouncil.org/uploads/Taxes_Poll_Report_FINAL.pdf

http://www.asbcouncil.org/poll_money_in_politics.html

http://www.asbcouncil.org/poll_access_to_credit.html

Copyright 2012 Greenville News and Poll Reports

Pay Pal Wars—Some Important Lessons for Entrepreneurs

I’ve just finished reading PayPal Wars: Battles With eBay, the Media, the Mafia, And the Rest of Planet Earth. Written by former PayPal director of marketing, Eric Jackson and published in 2004, this book gives a detailed account of the company’s development and growth from its earliest days to the time just after its sell out to eBay in July of 2002.

It tells of the revolutionary vision of PayPal founder, Peter Thiel, highlights pivotal decisions, and describes the major, obstacles, and challenges that PayPal encountered on its way to becoming a dominant force in online payments. Besides challenges from a bevy of competitors, the company had to contend with “clashes with credit card associations, the banking lobby, state regulators, foreign Mafioso, and litigation-happy lawyers.”

Jackson’s book is both an engaging tale and a valuable resource for entrepreneurs of all stripes. There are many lessons to be learned from the Pay Pal experience about what it takes to bring a significant innovation to market and to scale. I strongly encourage social entrepreneurs especially to read at least the first chapter (“The New Recruit”) and last chapter (“Sell Out”), as well as the Epilog.

The picture which Jackson paints in his telling of the PayPal story suggests to me the urgent need for social entrepreneurs and champions of the common good to find new ways of creating business enterprises that do not depend upon conventional business models or Venture Capital financing.

I substantial portion of the book is available to be read online at Google Books. You can also see a detailed description and reviews of the updated paperback edition (2010) at Amazon.com.

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